Applications using work flow mechanisms and user-defined buying rules to move a purchase request through an organization and out to suppliers via the Web. Some e-procurement solutions have business intelligence software that analyzes purchasing trends and supplier performance.
Xerox Corporation soon expects that 80% of its non-production purchasing will be conducted using a recently installed internet procurement system. Xerox expects the current purchase order cost of $150 to drop by 80% to about $25 per purchase (they processed about 100,000 orders in 1999). Overall, the company anticipates cutting more than 1% of its total spending on non-production goods and services.
The Potential of e-Procurement Source: Wall Street Journal; Business Wire; International Data Corporation, 1999 $ Billions Cintas Joins Commerce One MarketSite CINCINNATI- Cintas Corporation, the leading supplier of corporate identity uniform programs, today announced it has joined the premier list of featured suppliers for Commerce One, Inc., the leader in global e-commerce solutions for business. Healtheon/WebMD To Create Web Site With Mediabuy.com ATLANTA- Healtheon/WebMD Corp. and Mediabuy.com Inc. agreed to create a Web site where doctors can buy medical and nonmedical supplies. Chase and Intelisys Host Educational Forum for Chase Suppliers on the Benefits of Web-Enablement NEW YORK – The Chase Manhattan Bank, lead subsidiary of The Chase Manhattan Corporation (NYSE: CMB), and Intelisys Electronic Commerce, Inc., a global leader in electronic procurement, announced today that they have taken the next step in building a Chase online business-to-business… Toyota May Join Ford’s Online System TOYOTA CITY, Japan - Toyota Motor Corp. has begun discussions with Ford Motor Co. about joining the U.S. auto maker’s newly formed Internet marketplace for suppliers, a top Toyota executive said. The move comes less than a month after General Motors Corp. offered Toyota a similar invitation to participate in its own Web-based marketplace venture. Chevron and Ariba To Form Web Market For Energy Industry SAN FRANCISCO - Chevron Corp. and electronic-commerce-software developer Ariba Inc. said they plan to create an online marketplace to link buyers and suppliers in the global energy industry. The business-to-business portal, to be called Petrocosm Marketplace, will run online auctions and electronic procurement for companies to buy and sell oil and gas products and services, including drilling, engineering and construction. Worldwide Expenditures Processed by E-Procurement Applications
The Benefits of e-Procurement Source: International Data Corporation; MMG analysis
ERP Market Leaders Source: Forrester Research #1 #2 #3 #4 #5 1994 SAP Oracle SSA J.D. Edwards Baan 1995 SAP Oracle SSA J.D. Edwards PeopleSoft 1996 SAP Oracle J.D. Edwards PeopleSoft Baan 1997 SAP Oracle PeopleSoft J.D. Edwards Baan 1998 SAP Oracle PeopleSoft Baan J.D. Edwards 1999 SAP Oracle PeopleSoft J.D. Edwards Baan 2000 SAP Oracle PeopleSoft J.D. Edwards The Sage Group 2001 SAP Oracle PeopleSoft J.D. Edwards The Sage Group 2002 SAP Oracle PeopleSoft J.D. Edwards The Sage Group 2003 SAP PeopleSoft Oracle The Sage Group Microsoft
Trading partners (manufacturers and retailers) cooperatively planning and communicating product initiatives and marketing strategies to jointly predict volume. They also collect and use retail store consumer data to forecast replenishment needs.
Wal-Mart and Warner-Lambert (now Pfizer Consumer Products) piloted a program initially using spreadsheets to exchange information, now using Web-based collaboration software and back-end tools.
Collaborative Planning, Forecasting and Replenishment (CPFR)
CPFR Concepts Information Product Supplier Manufacturer Distributor Retailer Consumer Internet Forecast (Base and Promo) POS On-hand data Manufacturer Retailer Collaboration Tool Outputs Collaboration triggers Exception based warnings Forecast (Base and Promo)
Collaboration Among Partners Manufacturer Manufacturer/Retailer Distribution Center Customer Information
Web based Extranet integrated with a manufacturer’s or distributors’ ERP system. Functionality can include on-line catalogs, product availability, pricing, order placement and order status .
Life Fitness, a manufacturer of fitness equipment, implemented an Internet based solution which is enabling it to eliminate more than 600 phone calls per day. Customers can now buy parts, check order status and view an on-line catalog. They now have real time information about part availability, price and orders status.
NOTE: Extranet and Intranets both use Internet- based technology and limit access to authorized users. However, only internal employees can use an intranet while authorized external users, such as suppliers can access an Extranet.
Suppliers using the internet have visibility upstream in the supply chain to determine manufacturers requirements and automatically replenish inventory (Supplier/Vendor Managed Inventory)
Shell Chemical Company is one of the first chemical companies in the industry to adopt supplier-managed inventory (SMI). Many manufacturers supplied by Shell Chemical no longer place orders. Shell Services developed SIMON to allow both supplier and customer to share necessary information. SIMON also can be accessed remotely via the Internet. The SMI process reduces the total inventory carried by the customer and supplier, which means lower costs for everyone. Savings estimates between one-half to one cent per pound of product the customers consume. More significant, Shell has gained millions of dollars in additional revenues since first offering SMI to its customers.
Using the web to offer value added services to customers and/or suppliers.
ChemicalDesk is an online exchange for the water treatment chemicals market. It offers its users resources including: Chemical products and related monitoring equipment, custom logistics and distribution services, technical support and consulting services, and material safety data sheets (MSDS)
The BASF Web site connects to technical data sheets and related information on products available in the U.S., Mexico, and Canada, and lets registered buyers check inventory, analyze use, and calculate forecasts
Using Web based tools for managing product changes through a company’s network of manufacturing partners to reduce inventory shortages, rework and procurement errors. All engineering or supplier changes reside in one place.
Fujifilm Electronic Imaging Ltd (FFEI) designs and manufactures scanners, recorders and imaging software. FFEI recognized that it could improve its time to market by streamlining the design and manufacture process. They decided they needed a system that could encompass the entire development, introduction and change management process. FFEI bought an off the shelf web based system that is now available across their Intranet. The engineering change process, product configuration management and document vaults are now fully automated and the system integrates information from CAD and MRP systems as well